Railpen, the £36bn manager for the Railways Pension Scheme, has appointed Robeco to run a global equities mandate worth an initial £1bn.
The arrangement will see Robeco operate the mandate alongside Railpen’s existing internal team, mirroring arrangements that the pension scheme already employs in other asset classes.
Although Railpen has relationships with several other external managers, in a statement the scheme said the Robeco partnership represented a “significant evolution” in its investment strategy. The internal team will focus on “strategic oversight”, Railpen said.
Robeco was selected for its quantitative approach following a thorough search, according to Craig Heron, director of public markets at Railpen. He explained that the appointment was part of the scheme’s “hybrid investment approach”, with external asset managers appointed “where we believe they can enhance outcomes for members”.
“The mandate is designed to complement our existing internal equity capabilities and strengthen the resilience and diversification of our overall public markets portfolio,” Heron added.
The mandate is the cornerstone investment for a new “quantamental” strategy, and will be benchmarked against the MSCI All Country World Index.
Robeco’s chief investment officer Anton Eser explained that the “quantamental” approach was designed to combine fundamental and quantitative investing strategies.
“By combining the strengths of these complementary disciplines, we have worked closely together with Railpen in developing a distinctive investment solution focused on delivering attractive long-term outcomes,” Eser said. “This investment marks the beginning of a broader strategic partnership with Railpen, and we look forward to deepening our collaboration over the years ahead.”
Caroline Hedges, head of credit and manager implementation at Railpen, said: “Our focus is always on delivering the best long-term outcomes for members. In appointing Robeco, we undertook extensive due diligence and secured competitive commercial terms, ensuring we believe the mandate offers strong value for our members.
“Robeco’s investment approach and its commitment to sustainable ownership are closely aligned with the trustee board’s objectives, while supporting Railpen’s wider strategy of investing globally to achieve the best risk-adjusted returns for the schemes we serve.”
